Sweden's Economic Growth Disappoints in Q1 2026 Amid March Recovery

Sweden's economy contracted by 0.2% in the first quarter of 2026 compared to the previous quarter, falling short of analysts' expectations for a 2.2% growth, according to reports from both Finanstid and Göteborgs-Posten. The annual growth rate stands at 1.6%, reflecting a slowdown from the 1.8% growth seen in Q4 2025. This weak start was tempered by a notable rebound in March, when economic activity grew by 1.9% compared to February, returning to levels observed at the end of 2025.

Retail sales in March increased by 3.1%, with the strongest gains reported in non-food and non-durable goods sectors. Neda Shahbazi, an economist at Statistics Sweden (SCB), highlighted that the March rebound followed declines in economic performance during January and February.

The mixed performance indicates that while Sweden's economy struggled at the start of 2026, there are signs of recovery as the quarter closed. The disappointing Q1 results contrast with earlier optimism, as economists had anticipated stronger quarterly growth. The increase in retail sales suggests consumer demand is picking up, potentially bolstering economic momentum going forward.

Overall, Sweden faces challenges to meet earlier growth forecasts, but March's improvements offer a cautiously optimistic outlook for the coming months.